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Blog : 24 November 2016 (Cumulative Trade between South Africa and various European countries)
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In today's blog we take a look at South Africas trade balances with 6 European countries, namely Belgium, France, Germany, Italy, Netherlands and the UK. Adn based on the grouping type it is clear where South Africa has the competitive advantage and where our European counterparts have the edge
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Trade balance swings based on different products
The line graph above shows the cumulative trade balances (exports-imports) from January 2016 to September 2016, per country per product grouping.
From the stacked bar chart above one can clearly see in which product groups South Africa export way more in value than what they import, and on the flip side it becomes clear in which product groups South Africa imports substantially more than what they export. For example Vegetable exports to both the UK and Netherlands that is strongly in favour of South Africa. Exports to Netherlands does not necessarily imply it will be consumed there, the Netherlands is often seen as a gateway to the rest of Europe via Rotterdam, but point remains South Africa exports more vegetables than what it imports from these countries.
From the stacked bar chart above one can clearly see in which product groups South Africa export way more in value than what they import, and on the flip side it becomes clear in which product groups South Africa imports substantially more than what they export. For example Vegetable exports to both the UK and Netherlands that is strongly in favour of South Africa. Exports to Netherlands does not necessarily imply it will be consumed there, the Netherlands is often seen as a gateway to the rest of Europe via Rotterdam, but point remains South Africa exports more vegetables than what it imports from these countries.
Other product groupings in which South Africa has the competitive advantage compared to their peers include: Mineral Products and Precious metals (to be expected as we one of the most mineral rich countries in the world). What would suprise some is the fact that according to trade with these countries for 2016 so far, South Africa is net exported of Vehicles, Aircraft and Vessel. It should be noted that for Italy and the Netherlands there is deficit in this group but for Germany, UK and France there is a net trade surplus in this grouping. This is due to the fact that South Africa imports parts from these countries (see the massive deficit we have with these countries under Equipment Components), and then we assemble the vehicles and export it back to these countries. We manufacture German vehicles in South Africa and then export the RHD vehicles back to Germany or directly to the UK where they are sold.
As mentioned above the massive trade deficit under Equipment components is largely made up by South Africa importing car parts from these countries and then use these parts on the assembly lines used to build vehicles that are then exported back to the countries in question. In majority of the cases South Africa manufactures RHD german cars such as BMW and Volkswagen and then exports these RHD vehicles to the UK where they use RHD vehicles.
Sadly South Africa has not really seen the benefit of it's competitive advantage in products such as minerals and precious metals in recent years, with it's trade deficit seeing record levels. This is largely due to lack of demand for goods in which South Africa has competitive advantage, lower prices and all sort's of supply side issues experienced in South Africa. These include lack of consistent power supply for mines and smelters, continued strike action at mines and mines getting deeper and harder to mine.
Time for South Africa to find a new product in which it has a competive advantage and to then push the exports of this so that it can derive the full benefit from such advantages.
Sadly South Africa has not really seen the benefit of it's competitive advantage in products such as minerals and precious metals in recent years, with it's trade deficit seeing record levels. This is largely due to lack of demand for goods in which South Africa has competitive advantage, lower prices and all sort's of supply side issues experienced in South Africa. These include lack of consistent power supply for mines and smelters, continued strike action at mines and mines getting deeper and harder to mine.
Time for South Africa to find a new product in which it has a competive advantage and to then push the exports of this so that it can derive the full benefit from such advantages.
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